But five years and four months ago, Labor’s then assistant treasurer and now opposition Treasury spokesman, Chris Bowen, did just this with his budget night Pearl Harbor raid on employee share ownership.
Labor’s 2009 changes introduced some of the worst and most punitive tax settings in the world, taxing the value of employee share options before they could even be exercised.
Within days countless plans were suspended or closed; ever since the start-up sector in particular has been stifled and stalled. Employee share ownership is a vital fertiliser for the start-up sector. Risk and reward are high, cashflow often low, so equity and a stake in the future success of the venture is the key to attracting talent.
As a consequence, for more than five years many businesses have chosen Silicon Valley and Britain over Australia, starving us of creativity, denying our nation not just their success, but the cycle of innovation, demonstration effects and flow-on success they would have spurred in other businesses and in the wider community.
Restoring what Labor destroyed is vital and urgent. But that should just be the first critical step. Without an ongoing commitment to further policy action, we will have only succeeded in sprinting back to the starting line of pre 2009.
The government’s upcoming National Industry Investment and Competitiveness Agenda policy announcement provides the ideal opportunity to do both: clean up Labor’s tax poison and pesticide and also kickstart a program of further policy reform for the future.
If we are to fully realise the transformative nature of deep and integrated employee share ownership in our broader economy, we must keep running and delivering further incentives in the months and years ahead.
The changing nature of our economy demands that we aim not merely to re-establish the policy settings we once had, but to progressively move beyond them. This is crucial not only for hi-tech businesses targeting digital markets but also for start-ups in areas as diverse as speciality food to mining equipment — areas where Australia has the potential to lead the world.
We know from overseas experience that for a whole range of businesses, employee share ownership boosts productivity, breaks down industrial barriers, and creates an ownership transition opportunity for long-serving employees in many small and medium businesses.
The concept of employee share ownership is foreign to many — but only because it has been foreign to many Australians. The US and Britain have a far better take-up of employee share ownership because they have far more favourable policy settings.
While tax is one barrier, regulation is another, and always has been. We must further simplify onerous prospectus requirements and make it easier for employers to offer share plans in the first place.
Establishing a high-level, permanent advisory panel of experts from both government and, critically, industry to guide simplification would help. This is needed to steer these changes through so they are realised and achieved rather than lost in the bureaucratic forest. This panel would provide a one-stop advice point for businesses wanting to offer employee share ownership opportunities, produce template materials, and help promote and communicate the benefits of employee share ownership.
Finally, in our coming tax white paper, we must seek to deliver longer-term stage-two tax reforms and simplification to drive development further. If we are to meet the demands of the decades ahead we must seek to spawn a new age of enterprise and opportunity.
Our economy is changing.
When a big employer lays off 100 workers the picture tells the story. When 100 small and medium businesses each hire an additional employee we don’t see it.
It is a story that cannot be summed up in a single picture.
Yet it is a big part of our recent and future story; diminishing numbers of large enterprises with mass workforces and growing masses of smaller and medium-sized enterprises.
To capitalise on this we must focus on improving the policy settings that will further foster entrepreneurship and enterprise generally. Without doing so, we cannot hope to repair our competitiveness, which according to professor Tony Makin, has deteriorated by nearly 50 per cent since 2008, while our ranking in the World Economic Forum fell from among the top 10 to 24th.
And it is only by providing our entrepreneurs, innovators and risk-takers with the best policy tools we can that slide will be reversed.
One of those tools must be a world’s best employee share ownership policy regime. And we can and must achieve it within the next five years.
This piece was published in The Australian on 16 September 2014.